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Conventional to VA Refinance Loan

By: Grant Moon 09/10/14 10:13 am

You may have heard of the Home Affordable Refinance Program, or HARP. Originally introduced in 2009 then later adjusted to HARP 2.0, it is a special refinance program for those with conventional mortgages allowing a home owner who owes more on the home than it’s worth to refinance to a lower rate. Historically, conventional refinances needed at least 10% equity before a refinance could be permitted.

That means a home valued at $100,000 would have a maximum loan amount at $90,000. If the loan amount was $100,000 or higher, no refinance could take place. The HARP program eliminated that requirement and others helping millions of homeowners reduce their monthly payments.
Yet not everyone in such a situation could take advantage of the program for a number of reasons due to certain requirements.

For example, if a conventional mortgage isn’t owned by either Fannie Mae or Freddie Mac, HARP won’t work. There is an alternative however for those who are VA loan eligible. A borrower can refinance a non-VA loan into a VA mortgage. Someone who is having equity issues can access the VA mortgage program to refinance to a lower rate as long as the new loan meets standard VA refinance guidelines. Still another reason why VA loans are an excellent choice!

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